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Digi-Key Marketplace and Fulfillment Service

By Pat Sagsveen

Contributed By Digi-Key Electronics

Digi-Key Electronics has recently created a couple of programs to help expand aggressively into new markets. These programs offer new opportunities for suppliers or distributors who are looking to add new channels to their overall strategy.

In October of 2019, Digi-Key began a Marketplace program that allows suppliers to leverage the Digi-Key website. This has opened the door for many new suppliers because of the quick and efficient onboarding process in place. The Marketplace also offers flexibility to suppliers because products would not need to be housed at Digi-Key. This program can be leveraged by several different kinds of suppliers for multiple reasons detailed further below.

In July of 2020, Digi-Key began offering a fulfillment service called “Fulfilled by Digi-Key”. This program allows suppliers to warehouse products at Digi-Key and leverage the same world-class logistics that customers worldwide have come to know and love. This program gives suppliers the ability to have a single warehouse for global shipments at a very reasonable cost.

Both programs are being offered today. Suppliers can choose between the Marketplace model, the Fulfilled by Digi-Key model, or a blended model of both. These programs are not only open to manufacturers, but to distributors as well. The process to get signed up for either program involves filling out a simple online application. This application will work for both the Marketplace and Fulfillment program.

Marketplace

The Marketplace program allows suppliers to leverage the Digi-Key website while housing products at their location. The onboarding time for this program is relatively short and many suppliers have onboarded and been live on the website within a month of Digi-Key receiving their application.

The Marketplace is a great program for suppliers or distributors who already have an existing logistics network. The default setting within the Marketplace is U.S. only; however, suppliers can choose to expand globally in the Marketplace program by simply letting Digi-Key know which countries they feel comfortable shipping to.

The Marketplace program can be used for more than just hot new products. The Marketplace can also be leveraged for products that are either overstocked, end of life, obsolete, or that would not have found their ways into a more traditional distribution channel. A great example of a distributor who is already leveraging this program would be Rochester Electronics. Rochester works with semiconductor manufacturers as a licensed stocking distributor. Much of their current inventory consists of obsolete parts that cannot be sourced anywhere else. Rochester lists their parts on the Digi-Key website, allowing them to have access to the existing Digi-Key customer base.

Many suppliers have products that are difficult to ship and that can’t be handled through a normal distribution strategy. Suppliers who are already certified to ship products such as lithium batteries, chemicals, or any product that would need special requirements for shipping would also be prime candidates for this program.

In the Marketplace program, suppliers operate from an online portal where they can accept or decline orders, update stock, and have a dashboard of their weekly sales. Pricing and quantities available can be dictated through this portal and an API (Application Programming Interface) can be used to help in managing this. Web pricing in the Marketplace is fully controlled by the supplier and Digi-Key takes a commission off of these sales. Suppliers can use tiered pricing structures to offer discounts at set quantities allowing customers easy visibility into what higher quantity costs would be. This helps to show customers what their quoted price would be for higher quantities and historically has driven sales up to quantities listed on the price breaks.

Fulfilled by Digi-Key

Leveraging the Fulfilled by Digi-Key program allows suppliers to warehouse their products at Digi-Key and leverage Digi-Key’s existing logistics network. This model allows for suppliers to sell their products globally without having to handle any of the shipping themselves other than getting products to Digi-Key. The default setting in this program is a global engagement; however, if certain products cannot be sold into certain regions this can be controlled by simply letting Digi-Key where products cannot be shipped to.

Digi-Key is known for shipping low MOQs (Minimum Order Quantities) to customers globally and this program will allow suppliers to use Digi-Key’s existing channel to accomplish this for overall lower rates for customers. If a supplier is selling parts that come on reels, Digi-Key can offer a value-add service of cutting those parts into cut tape strips to ship lower MOQs to customers.

This program is great for suppliers who are looking for a global partner in their distribution strategy. Digi-Key can offer same-day shipping for any orders placed before 8 p.m. central time. The supplier would not be charged for any shipping to customers and, for a very reasonable price, can warehouse products at Digi-Key in a well-controlled setting that is set up to handle parts that have MSL (Moisture Sensitivity Level) considerations and/or ESD (Electrostatic Discharge) considerations. This is a quote from the ESD Certified Professional Program Manager Shane Heinle that relates to conditions within Digi-Key:

“Digi-Key takes great pride in offering our customers Exceptional Value, Quality Product, and Superior Service along with the most important part of Continuous Improvement in our handling of ESD and MSL products. We are always looking at ways to make sure our customers and suppliers are taken care of, by making sure the products we sell are handled and packaged correctly while at Digi-Key. Digi-Key has been certified to ANSI/ESD S20.20 since March of 2010 and we follow the JEDEC J-STD-033 standard for handling moisture-sensitive products. “

The Fulfillment model essentially operates as a consignment model. The supplier would provide a “cost” of their goods to Digi-Key. Digi-Key would set resales online for the supplier and Digi-Key would pay the supplier back the “cost” for each product that was sold. The supplier would not need to manage a portal in this program and Digi-Key will provide weekly inventory reports to monitor stock levels.

What suppliers can leverage on the Digi-Key website

Suppliers leveraging the Marketplace or Fulfilled by Digi-Key program would have the same visibility as other suppliers who are currently engaged with Digi-Key. Digi-Key would create a “Supplier Marketing Center” like the one that was previously linked for Rochester Electronics. This would be a page where only that supplier’s parts could be searched. This would essentially be the landing page for that supplier. An image of Rochester Electronics supplier center can be seen below in Figure 1.

Image of Rochester Electronics supplier marketing centerFigure 1: Rochester Electronics supplier marketing center.

Suppliers can add product highlights, tools, supporting documentation, videos, social media handles, and a litany of other things into their supplier marketing centers. This is a page that is dedicated entirely to that supplier. The search function on this page will only pull up products from that supplier and product categories that their products reside on are shown on this page.

When searching for products on the Digi-Key website, Marketplace products and Fulfilled by Digi-Key products may be mixed in with the products found by the search. An example of this can be seen with two of our suppliers currently using this program. Cal-Chip Electronics Inc is currently a Marketplace supplier for Digi-Key and Holy Stone Enterprise is currently a Fulfilled by Digi-Key supplier. Figure 2 shows how both parts appear on the web search the same way. Users familiar with the Digi-Key website will note that this is how all products are displayed on the website.

Image of marketplace vendor vs fulfillment vendor on Digi-Key search (click to enlarge)Figure 2: Marketplace vendor vs fulfillment vendor on Digi-Key search.

Final thoughts

Digi-Key has been a well-known name in the electronics industry for several decades. Digi-Key is hoping to offer new opportunities for new and existing suppliers by adding these programs. These are low-risk programs that are made for easy onboarding and meant to get suppliers exposed to an already existing customer base of electrical engineers, systems integrators, OEMs, CMs, and many other types of customers. The purpose of this article was to inform potential suppliers of this opportunity within Digi-Key.

Disclaimer: The opinions, beliefs, and viewpoints expressed by the various authors and/or forum participants on this website do not necessarily reflect the opinions, beliefs, and viewpoints of Digi-Key Electronics or official policies of Digi-Key Electronics.

About this author

Pat Sagsveen

Pat Sagsveen, Product Manager at Digi-Key Electronics, is responsible for recruiting, onboarding, and managing companies added to the Digi-Key Marketplace and Fulfillment service. He joined Digi-Key in 2016 after earning his Associate in Applied Science degree in Electronics and Communication from Bismarck State College. His passion for music led him into electronics and his passion for electronics led him to Digi-Key.

About this publisher

Digi-Key Electronics

Digi-Key Electronics, based in Thief River Falls, Minn., is a global, full-service provider of both prototype/design and production quantities of electronic components, offering more than six million products from over 750 quality name-brand manufacturers at Digi-Key.